On February 12, 2013, President Barack Obama issued the long awaited cybersecurity Executive Order, which will establish national cybersecurity standards for critical infrastructure. This cybersecurity Executive Order was developed by the White House in response to an inability of Congress to enact similar legislation. This Executive Order will begin a multi-year legislative and regulatory process that will result in new cybersecurity regulations, information sharing channels and changes in cyber liability for critical infrastructure and government contractors. These changes will create a number of opportunities and risks for companies in a wide range of private sector companies.

The White House reportedly began drafting an Executive Order on cybersecurity in August 2012 after the Senate failed to achieve cloture on the Cybersecurity Act of 2012, commonly referred to as the Lieberman-Collins bill. The White House held a series of meetings with critical infrastructure industries and interest groups to gather feedback during Fall 2012. A draft Executive Order surfaced in November 2012. The final cybersecurity Executive Order largely tracks the policy framework laid out in the November draft.

The Executive Order is designed to establish a national approach to cybersecurity. However, an Executive Order is limited to existing executive authority, so legislation will be necessary to address those issues which the President could not address in the Executive Order, such as liability protections, incentives for participation and parameters for information sharing. President Obama announced the issuance of the cybersecurity Executive Order and called on Congress to pass legislation to address these gaps in the 2013 State of the Union address:

America must also face the rapidly growing threat from cyber-attacks. (Applause.) Now, we know hackers steal people’s identities and infiltrate private emails. We know foreign countries and companies swipe our corporate secrets. Now our enemies are also seeking the ability to sabotage our power grid, our financial institutions, our air traffic control systems. We cannot look back years from now and wonder why we did nothing in the face of real threats to our security and our economy.

And that’s why, earlier today, I signed a new executive order that will strengthen our cyber defenses by increasing information sharing, and developing standards to protect our national security, our jobs, and our privacy. (Applause.)

But now Congress must act as well, by passing legislation to give our government a greater capacity to secure our networks and deter attacks. This is something we should be able to get done on a bipartisan basis. (Applause.)

The final Executive Order includes major roles for the Department of Homeland Security (DHS) and the National Institute of Standards and Technology (NIST) in the implementation of the Executive Order. NIST will be issuing a Request for Information (RFI) posing a series of questions for critical infrastructure in the next several days and holding a public workshop to begin the process of establishing the Cybersecurity Framework in early April. The White House indicated that it will initiate a series of meetings with critical industry sectors to begin the implementation process.

Here is a basic summary of the major provisions of the Executive Order:

The Executive Order is designed to address Critical Infrastructure, which is defined as "systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters."

DHS will designate certain industries as Critical Infrastructure at Greatest Risk, which is defined as "critical infrastructure where a cybersecurity incident could reasonably result in catastrophic regional or national effects on public health or safety, economic security, or national security" and will begin receiving certain additional cyber threat information.

NIST is required to establish a Cybersecurity Framework, which is defined as "a framework to reduce cyber risks to critical infrastructure." The Cybersecurity Framework is required to be established within one year and must be updated "as necessary." The Framework:

"shall include a set of standards, methodologies, procedures, and processes that align policy, business, and technological approaches to address cyber risks"

"incorporate[s] voluntary consensus standards and industry best practices to the fullest extent possible"

"shall be consistent with voluntary international standards when such international standards will advance the objectives of this order"

"shall provide a prioritized, flexible, repeatable, performance-based, and cost-effective approach, including information security measures and controls, to help owners and operators of critical infrastructure identify, assess, and manage cyber risk"

DHS is required to establish a Voluntary Critical Infrastructure Cybersecurity Program to encourage owners and operators of critical infrastructure to adopt the Cybersecurity Framework. An annual report will be developed with a list of the owners and operators of Critical Infrastructure at Greatest Risk that are participating in the Voluntary Cybersecurity Program. The voluntary program does not include incentives for participation, but DHS, Treasury, and Commerce submit recommendations to the President on the establishment of incentives, which may require legislation.

The Executive Order is intended to increase Information Sharing between the government and critical infrastructure by "increase[ing] the volume, timeliness, and quality of cyber threat information shared with U.S. private sector entities so that these entities may better protect and defend themselves against cyber threats." The Order will expand the Enhanced Cybersecurity Services (ECS) program, which was previously available to Commercial Service Providers, to all critical infrastructure.

The Executive Order requires an annual assessment and report on Privacy and Civil Liberties Protections.

As the President indicated, this Executive Order will spur a significant legislative focus on new cybersecurity legislation that will address the gaps left by the limitations inherent in executive authority. Representative Mike Rogers (R-MI), Chairman of the House Intelligence Committee, and Representative Mike McCaul (R-TX), Chairman of the House Homeland Security Committee, have indicated that they will be introducing new cybersecurity legislation within the next few weeks. Meanwhile, the Senate is considering a joint Committee hearing that would include the Homeland Security and Government Affairs Committee, the Commerce Committee, and the Intelligence Committee that would begin the process in the Senate to respond legislatively to the cybersecurity Executive Order.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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